Two other studies conducted in the industrial market in the final months of last year also show that economic growth and confidence levels among manufacturers are in troubled waters as 2008 begins.
An economic forecast by The Manufacturers Alliance/MAPI, a nonprofit economic and policy research organization whose membership includes U.S.-based and international companies in manufacturing and related business services, predicted in November that inflation-adjusted GDP growth in the United States would slow to 2.1% in 2007 and to 1.3% in 2008.
The Manufacturers Alliance/MAPI also predicted that manufacturing production growth would decline to 1.9% in 2007 and would remain flat this year, compared with 4.7% growth in 2006. In an earlier forecast conducted in August, manufacturing production growth was estimated at 2% in 2007 and 2.9% in 2008.
"The U.S. economy in the past has experienced a recession from fewer shocks than we are now experiencing," said Daniel J. Meckstroth, the chief economist of The Manufacturers Alliance/MAPI, in a prepared statement. "By itself, the housing collapse would probably not cause a recession, but when combined with a credit crunch, falling housing prices, record oil prices, falling corporate profits, low consumer confidence, and decelerating employment growth, the risk of recession has climbed to at least 50%."
Another study, by PricewaterhouseCoopers, showed a 17-point decline in confidence levels among senior manufacturing executives.
PWC said that its Manufacturing Barometer for the third quarter of last year, conducted with 60 senior executives of large U.S. industrial manufacturing companies, showed that 45% of those surveyed were optimistic, 17 points below the 62% expressing optimism in the prior quarter.
High energy and oil prices were cited as the most likely barriers to growth over the next 12 months by 57% of the respondents. Other factors cited were lack of demand, by 53%; legislative and regulatory pressures, by 50%; and decreasing profitability, by 48%.
Only 42% of respondents said they were planning new business initiatives, compared with 57% saying so in the previous quarter. Of those planning new investments, 57% plan to spend more on IT, PWC said.
[Editor's note: Still another survey, published in January, found manufacturers are optimistic about revenue growth and hiring in 2008, despite worries about the general economy.]